Agenda

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City Council Regular Meeting

Meeting Date:

07/13/2021

BACKGROUND

The City of Schertz Public Works Department contracted with Utility Engineering Group (UEG) to perform a Water and Wastewater Rate Study. Traditionally, the City has performed full rate studies approximately every five years with smaller updates as needed. The rate study done this year is independent of previous studies in order to provide a complete analysis.

The analysis performed by UEG and City Staff involved reviewing historical financial information, water billing data, as well as future forecasting that our partner agencies have completed such as CCMA and SSLGC. The analysis concluded there are two driving factors that effect the future rates for the City of Schertz. Those factors are capital improvement projects and increases in the cost of purchased water as a result of the SSLGC Guadalupe Project.

In previous rate studies, an assumed capital improvement project cost was generally plugged into the analysis. This general approach has resulted in underfunding in the Water & Sewer Construction Reserves to ensure safe and reliable water. Now that City Staff has developed a full ten-year Capital Improvement Plan (CIP) the rate analysis was accomplished using the estimated costs of necessary projects. By using the CIP, the rates can be structured and scaled to generate appropriate funding to support the Water and Wastewater services in the City.

The SSLGC Guadalupe Project is under construction and is expected to begin delivering water to the City of Schertz during the 2022 - 2023 fiscal year. The water produced from this project does not have the same rate as the Gonzales Project water and will result in the City's cost of water to increase by approximately 11% from fiscal year 2021 - 2022 to 2022 - 2023. This increase was considered when completing the rate analysis in order to phase in the increase to the customers.

Based on these factors, as well as others, that will be further presented during the rate study workshop, UEG and City Staff are recommending a combined Water and Wastewater target revenue increase for fiscal year 2021 - 2022 of 4%. The workshop will allow for discussion of the study and the proposed rates; but no action will formally be taken during the workshop.